Customer Acquisition Cost (CAC) Calculator
What it really costs to win one new customer once sales time and tools are counted alongside advertising.
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- Formula and worked example included
Customer Acquisition Cost Calculator
Enter your figures to see results.
What is customer acquisition cost, in plain terms?
Customer acquisition cost is what you spend, in total, to win one new paying customer. It is not just the ad spend: the agency, the sales calls, the CRM and the discount to close all count. If you spent £12,000 to gain 150 customers, each one cost £80, which only makes sense if they go on to earn you more than £80.
How to use this calculator
- Enter all marketing spend for a period: ads, agency, content, tools.
- Add sales costs for the same period: the time and tools used to close deals.
- Enter the number of new paying customers won in that period. Add lifetime value to see the CLV:CAC ratio.
What your result means
How to read the figure, what counts as normal, and what to do about it.
Why CAC is more than your ad spend
The number most businesses quote as "cost per customer" is cost per click or cost per lead from an ad platform. Real acquisition cost is higher: it includes the agency retainer, the time the founder spends on sales calls, the CRM subscription, the free trial period and the discount given to close. Leaving those out makes a channel look profitable when it is not.
Measure it over a fixed period, a month or a quarter, and match the customers to the same period. Because there is usually a lag between spend and sale, quarterly figures are steadier than monthly ones.
What to do with the answer
- Compare with lifetime value. A CAC below a third of profit-based CLV is sustainable. Higher than that, and each new customer is eating most of what they will ever earn you.
- Compare by channel. Referrals and organic search normally have the lowest CAC; paid social and outbound sales the highest. Shift budget towards channels whose CAC is falling or stable at volume.
- Watch the trend. CAC rises as you exhaust the easiest prospects in a channel. A rising CAC with flat CLV is the earliest warning that growth is about to get expensive.
- Set a ceiling. Decide the maximum you will pay for a customer (for example CLV ÷ 3) and give it to whoever runs your ads as a hard target.
Worked example: a regional accountancy firm
In a quarter the firm spent £8,000 on Google Ads, a local sponsorship and its marketing agency, and a partner spent time on discovery calls and proposals worth £4,000. It signed 150 new clients.
CAC = (8,000 + 4,000) ÷ 150 = £80 per client.
Each client brings about £320 of lifetime gross profit, so CLV:CAC is 4 : 1, which is healthy. The firm can afford to spend up to around £107 per client (a 3:1 ratio) before growth stops being clearly profitable.
Frequently asked questions
What is a good customer acquisition cost?
There is no universal figure: a £5 CAC is dreadful for a 99p app and superb for a mortgage broker. Judge it against lifetime value: keep CAC to a third or less of profit-based CLV.
Should I include salaries in CAC?
Include the share of salaries spent on winning new business: sales staff, and marketing staff time. Exclude time spent on existing customers.
What is the difference between CAC and cost per lead?
Cost per lead counts enquiries; CAC counts paying customers. If one in five leads converts, CAC is at least five times cost per lead before sales costs are added.
How do I lower CAC?
Improve conversion rates so the same spend produces more customers, lean on referrals and content that keep working after you stop paying, tighten targeting to cut wasted spend, and shorten the sales process.
The maths behind this calculator
For anyone who wants to check the working or rebuild it in a spreadsheet.
The formula
CAC = (Marketing costs + Sales costs) ÷ New customers acquired CLV : CAC = Customer lifetime value ÷ CAC
Blended CAC uses all spend and all customers. Paid CAC uses only paid-channel spend and only the customers it produced; it is the figure to use when deciding whether to scale a specific channel.
Assumptions and limits
- Customers and spend must be for the same period. Where there is a long sales cycle, allow for the lag or use rolling averages.
- Do not include the cost of serving customers after they sign up (support, delivery); that belongs in gross margin and lifetime value.
- "New customers" means first-time paying customers. Repeat orders and upgrades are retention, not acquisition.
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